250 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com $33 per hour would have been entitled to hazard pay of only $2 per hour. San Francisco narrowly defined covered employers as grocery and drug stores with at least 500 employees nationwide and at least 20 employees in San Francisco, but also covered third-party janitorial and security contractors whose employees worked in covered grocery and pharmacy retail stores, regardless of how many employees the contractor had. So if a small security contractor serviced a large grocery store, then the security contractor had to comply with the ordinance. 7.18 Tips In America generally, employers may use a “tip credit” by which they can count the amount of tips that customers leave for employees toward payment of the employee’s minimum wage: federal law and many state laws permit an employer to pay a tipped employee a sub-minimum base wage as low as one-half the minimum wage, provided that the amount of tips brings the actual wage up to the minimum wage.410 In California it’s different. A California statute forbids any employer to take any “gratuity or a part thereof … left for an employee by a patron, or … require an employee to credit the amount … of a gratuity against … the wages due the employee.” “Every gratuity” is the “sole property of the employee” for whom it was left.”411 Accordingly, employers of California service employees encounter a triple whammy. First, the state minimum wage is considerably higher than the federal minimum wage (see § 7.2). Second, the tip credit permitted by federal law is forbidden under California law: every “gratuity” becomes the sole property of the employee to whom it is paid, regardless of the base rate of pay, which means that the employee must receive at least the minimum hourly wage in addition to how many tips the employee receives.412 Third, certain limitations apply to any “tip pooling” scheme.413 For example, tips from the pool must not go to any “agent” of the employer.414 The California Supreme Court has held that service employees lack a statutory right to sue for unlawful tippooling,415 but suggested that employer diversion of gratuities might be tantamount to actionable conversion.416 And a 2019 Court of Appeal decision suggested further remedies, including a claim for restitution under the Unfair Competition Law.417 In that case food and beverage banquet service employees alleged that the banquet facility’s “mandatory service charge” of 21 percent should have gone exclusively to service staff but instead went to the employer and to managers and other non-service employees, even though the customers paying this charge reasonably thought the charge was a gratuity for service staff. The plaintiffs sought restitution and sued for interference with contract and for breach of implied contract. The Court of Appeal, finding “service charge” a vague term, rejected the employer’s argument that a “service charge” can never be a gratuity.418 The Court of Appeal concluded that the allegations supported a claim that customers intended the service charge to be a gratuity for the service staff, not management, and permitted the lawsuit to proceed. As to tips paid by credit card, California employers must pay the employee the full amount of the gratuity indicated by the customer on the credit card slip, without deducting for any processing fees, and must pay the gratuity to the employee no later than the next regular payday following the date the patron authorized the credit card payment.419 7.19 Vacation Pay California differs from most states by treating accrued vacation as a form of wages.420 More specifically, by virtue of a Supreme Court interpretation of Labor Code section 227.3,421 earned vacation must not be forfeited,
RkJQdWJsaXNoZXIy OTkwMTQ4